Saudi King Reduces Salaries, Perks for Senior Officials

Riyadh: Saudi Arabia’s King Salman is reducing the salaries and benefits of senior government officials as lower oil prices continue to pinch the kingdom’s economy.

The royal decree published on Monday orders a 20 per cent reduction in the salaries of ministers, among them the king’s successors- Crown Prince and Interior Minister Mohammed bin Nayef, and Deputy Crown Prince and Defense Minister Mohammed bin Salman. It also stipulates that ministers pay their own phone bills for personal lines.

Monday’s decree also includes a 15 per cent reduction in benefits for members of the country’s highest consultative body, the Shura Council, which is appointed by the king. Those include sums toward housing, a car, its maintenance and fuel during a member’s four-year term.

It marks the first cut to public sector wages since the kingdom began reining in spending after oil prices tumbled in mid-2014.

The unusual move was accompanied by a Cabinet decision to put new limits on public sector employees, many of whom have complained of already low wages.

The decision caps paid overtime hours to 25 per cent of the employee’s salary and at no more than 50 per cent for work on days off. It also freezes all new hires for government-funded jobs until the end of the current fiscal year.

Additionally, all non-essential foreigners who work for the government will not have their contracts renewed. It was not immediately clear how many people could be affected.

The changes, which go into effect early next week at the start of the Islamic new year, were announced three months before next year’s fiscal budget is unveiled.

With 70 per cent of Saudis working in the public sector, nearly half of the government’s spending in 2015, or around $120 billion, went to wages, salaries and allowances.

To cover the difference between its spending and revenue, the government has had to draw from its large foreign reserves, built up during years of higher oil prices. It also lifted some subsidies on gas and electricity.

The cuts, however, will not affect the salaries or allowances of soldiers taking part in military operations in Yemen, where a Saudi-led coalition has been bombing Iranian-allied rebels since March 2015.

The royal decree also did not mention reductions to the stipends of royal family members, a matter viewed as highly private in the kingdom.

The government has set out a bold Vision 2030 reform plan to trim spending, lessen its dependence on oil revenue and boost the appeal of private sector jobs. Officially, unemployment is at around 12 percent.